It's fairly obvious that Google Fiber's entry into the broadband market has made significant waves. While the actual deployments have been limited (with only just Kansas City significantly online just yet), the service's very presence has rekindled debate over the abysmal state of broadband competition in the United States. It has also resulted in a flood of competitive responses geared around providing speeds of 1 Gbps, even if many tend to be somewhat theatrical in nature
But how much impact has Google Fiber had really? A new report
(pdf) by GigU and Blair Levin (who co-wrote the country's national relatively underwhelming broadband plan
) takes a relatively rosy view of the benefits of Google's impact on the market.
The report is quick to point out how Kansas City saw a 97% improvement of average speeds to 34.4 Mpbs, a jump the report states is the largest in the country. The report is also quick to highlight the resulting deployment promises by Cox, AT&T, CenturyLink and others in regards to 1 Gbps services, an idea laughed at by ISP executives just last year.
"A year ago ISPs such as Cox and Time Warner Cable were antagonistic toward gigabit upgrades," Levin notes in the report. "They responded to gigabit initiatives with comments suggesting that upgrades were too expensive, and further, that they knew best what their customers wanted." Time Warner Cable was particularly vocal about how users didn't need 1 Gbps
and that demand simply isn't there for such speeds
"A year ago ISPs such as Cox and Time Warner Cable were antagonistic toward gigabit upgrades."
-Blair Levin, GigU
Now carriers "are singing a different tune," says Levin -- politely insisting that "we don’t mean this as criticism" but that the report is simply pointing out how these ISPs "deserve credit for recognizing how the landscape has changed."
All of that said, while the focus has shifted to ultra-fast speeds, lost in the shuffle has been a potentially more important metric of competition: price.
Google's $70 price point for 1 Gbps services is certainly welcome, and in some looming markets ISPs have responded with some lower pricing
. In other Google Fiber markets they haven't; preferring to simply try and lock down users in long-term contracts before Google Fiber comes to town.
The problem is such a limited footprint isn't placing national pricing pressure on companies like CenturyLink, AT&T, Verizon and Comcast -- who all seem stuck in a national race toward the next rate hike or new, obnoxious fee
Another problem is that many of these promised 1 Gbps deployments are highly theatrical in nature. It's a term I've coined called "fiber to the press release," where a carrier makes a lot of marketing noise about deploying 1 Gbps, but in reality is making the minimal effort to appear competitive, only offering those speeds to a handful of college campuses and high-end development communities. These deployments are so limited, the companies tell investors the upgrades won't actually cost them much of anything
What kind of network investment doesn't cost you anything? The kind that's either minimal or doesn't really exist. I was interested to see Levin and the report specifically address my concerns, though Levin brushes them aside as a "misunderstanding of the moment we are in":
Some have expressed skepticism that anything will result from these efforts, suggesting instead that this is all simply a version of "Fiber to the Press Release.” We understand the skepticism—after all, many of the players have not yet told Wall Street that their capital budgets will reflect the new investments necessary to upgrade their networks. We believe, however, that such a response demonstrates a misunderstanding of the moment we are in.
Companies don’t undertake new capital expenditures because they want to; they do so because they can justify the expense in light of a new opportunity or to defend an existing revenue stream. It should be remembered that in 2009, when the National Broadband Plan was gathering information about planned investments, no incumbent providers had publicly announced plans for world-leading networks in the United States. That some have done so now represents a positive change in their perception of both the opportunity and the threat.
First, it's worth noting that I've never argued that "nothing will result from these efforts" -- the conversation Google Fiber has generated about United States competition alone is worth its weight in gold. Cox, AT&T, C Spire, Google Fiber and other customers able to get 1 Gbps at a reasonable price should be pleased as punch. However, pointing out that some of these 1 Gbps announcements are more marketing than real deployment isn't "skepticism" -- it's a fundamental acknowledgement of fact
AT&T's planned deployment of 1 Gbps to "100 cities" isn't supported by any serious CAPEX bump
because they're very selectively deploying to tiny areas, and the upgrades will never reach the vast majority of AT&T users. Cox's deployment of 1 Gbps services, heavily cited in the report, won't even begin on any meaningful scale until 2016
, if it actually happens at all. Even Alaska's GCI, with real competitors nowhere in sight, has jumped in on the 1 Gbps game, ambiguously promising 1 Gbps to select users, maybe, someday
What AT&T, CenturyLink, Cox and others are doing is putting on a stage play -- designed to give the illusion they're on the cutting edge of broadband competition.
There's no need to "defend an existing revenue stream" if Google Fiber only reaches a handful of markets, and from the pace of deployment and Google comments, that's likely all they'll ever reach
. What AT&T, CenturyLink, Cox and others are doing is putting on a stage play
-- designed to give the illusion they're on the cutting edge of broadband competition. Ask any of the millions of CenturyLink customers paying $50 a month (or more if forced to bundle a landline) for barely 1.5 Mbps just how cutting edge they feel.
The intent here isn't to be a curmudgeonly killjoy -- it's to keep people focused on reality. There are tens of millions of users paying an arm and a leg for sluggish DSL lines who won't be seeing improvement anytime soon courtesy of limited competition, napping regulators, and the "new normal" of cherry picking only a few locations for next-generation upgrades.
People obviously truly love Google Fiber. Maybe sometimes a little too much
. But obsessing about 1 Gbps for a few few emboldens the industry's willful obliviousness when it comes to real price competition for all. Granted that's precisely what Levin did at the FCC when he crafted a national broadband plan that failed to seriously focus on price competition whatsoever
. Raw speed isn't the end all be all; ask anybody impacted by the Netflix direct interconnection feud
, which has resulted in people on 300 Mbps connections unable to handle a simple video stream.
While Gig U and Levin applaud the rush to 1 Gbps, in reality the combined impact of the Comcast merger and AT&T and Verizon's sharp retreat from DSL markets
means we're actually looking at less competition in many markets than ever before
. Even in markets where we actually have a little competition like New York, companies like Cablevision and Verizon FiOS have simply stopped competing on price
-- because they can.
There's plenty of other, less sexy industry issues that need the same if not more attention than the march toward 1 Gbps speeds. While AT&T holds the public's attention with "Gigapower" upgrades, the company's "IP transition" stands to effectively pull DSL lines out from under the feet of tens of millions of active users
, who'll then be forced to either expensive, heavily-capped LTE lines -- or cable competitors suddenly emboldened by less competition than ever before. The fight over potentially purging the country of ISP-written, protectionist state-level laws
is also as important as offering 1 Gbps ever was.
1 Gbps to select communities, developments and apartment buildings is certainly something to applaud. But it's in no way the measuring stick for what's happening for the vast majority of broadband customers, who remain stuck in a pricey duopoly market if they're lucky, with inexpensive and ultra-fast broadband nothing but a pipe dream.